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blagie [28]
3 years ago
11

A firm has a debt-equity ratio of .64, a pretax cost of debt of 8.5 percent, and a required return on assets of 12.6 percent. Wh

at is the cost of equity if you ignore taxes
Business
1 answer:
irina1246 [14]3 years ago
4 0

Answer:

15.22%

Explanation:

The computation of the cost of equity is shown below:

Required return on assets = Weightage of debt × pre tax cost of debt + weightage of  equity × cost of equity

where,

Weightage of debt is

= (Debt) ÷ (Debt + Equity)

= (0.64) ÷ (0.64 + 1)

= 0.39

And, the weightage of equity is

= (Equity) ÷ (Debt + Equity)

= (1) ÷ (0.64 + 1)

= 0.61

Now the cost of equity is

12.6% = 0.39 × 8.5% + 0.61 × cost of equity

12.6% = 3.315% + 0.61 × cost of equity

So, the cost of equity is 15.22%

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5 0
3 years ago
3. According to their comparative advantage, Alphaland specializes in axes and Betaville specializes in batons. Alphaland will t
Nady [450]

Answer: Option (C) is correct.

Explanation:

A country has a comparative advantage in producing a commodity if the opportunity cost of producing that good is lesser in that country as compared to the other country.

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7 0
3 years ago
​Valley, Inc. has​ 9,000 shares of preferred stock outstanding. The preferred stock has a​ $90 par​ value, a​ 14% dividend​ rate
EastWind [94]

Answer:

The dividends payout to preferred stockholders is $113,400 as shown below.

Explanation:

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Preferred shareholders have prior claims to dividends ahead of ordinary shareholders,but after bondholders' interest payments have been settled.

The same way they also have precedence in the distribution of company's assets before ordinary shareholders upon the liquidation of the company.

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8 0
3 years ago
NoGrowth Industries presently pays an annual dividend of $ 1.90 per share and it is expected that these dividend payments will c
dybincka [34]

Answer:

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3 years ago
You work for an auto manufacturer designing brake systems, but you do not have a dedicat- ed team. Instead, you move from projec
koban [17]

Answer:

C: Self-directed work groups and virtual teams.

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<em>Since</em>, there is not any dedicated team for my project, I am just moving into other teams for every new project I am going int o self-directed work groups and virtual teams.

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